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TMI Blog2017 (9) TMI 1815X X X X Extracts X X X X X X X X Extracts X X X X ..... ooperative banks would necessarily be cooperative societies, cannot lead to the presumption that all cooperative societies are also cooperative banks. There are different types of cooperative societies, many of whom may not be transacting any banking business. Let us take for instance an agricultural society. They may be indulging in the buying and selling of agricultural produce or seeds. In a way, the same could also be termed as a commercial or banking activity. But the same would not make such societies banks within the meaning of the Banking Regulations Act, 1949. The place where the Tribunal went wrong was that without reference to a single transaction that the appellant had with any non-member, the Tribunal upheld the findings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame of the appellant, with effect from 19-02-2009. In other words, the appellant claimed that it is not a bank within the meaning of Section 80P(4) of the Income Tax Act, 1961. 4. The appellant filed its returns of income for the Assessment Years 2007-08, 2008-09 and 2009-10, declaring nil income after claiming deduction under Section 80P(2), on the ground that it was running on the principle of mutuality, dealing only with its own members. 5. However, the Assessing Officer issued show cause notices proposing to refuse deduction on the ground that the appellant was carrying on banking businesses and was accepting deposits from non-members. The objections filed by the assessee/appellant were overruled and the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not concerned in the present batch of appeals. 8. The three appeals, one filed by the assessee in ITTA No.137 of 2012 in relation to the Assessment Year 2008-09 and the other two in ITTA Nos.473 and 474 of 2012 in relation to the Assessment Years 2007-08 and 2009-10 were taken up together by the Tribunal along with the cross-objections. 9. By a common order dated 23-12-2016, the Tribunal dismissed the appeal filed by the assessee in respect of the Assessment Year 2008-09, but allowed the two appeals of the Revenue in respect of the Assessment Years 2007-08 and 2009-10. Therefore, the assessee has come up with the above three appeals raising the following substantial questions of law: 1. Whether on facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilities, carried on by a cooperative society with its members, shall be treated as income as per the provisions of Section 2(24)(viia). 11. The Assessing Officer also drew inspiration from the Bye-laws of the appellant/Society to come to the conclusion that one of the objects of the appellant/assessee was to function as a bank and to borrow funds from members and others. Additionally the Assessing Officer invited a reference to the audit report of the assessee for the Financial Year 2007-08, wherein it was reported in the defects part that the appellant was collecting deposits from members and non-members. 12. Therefore, on the basis of the above findings, the Assessing Officer came to the conclusion that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objects of the society which included acceptance of deposits from non-members are all pointers to the effect that they were carrying on banking business. In other words, on the sole basis that the name of the appellant/Society carried the word Bank up to 19-02-2009 and also on the basis that the objects clause in the Bye-laws of the Society indicated dealings with non-members, the Tribunal reversed the findings of the CIT (Appeals) in relation to the Assessment Years 2007-08 and 2009-10. After doing so in the first part of the order, the Tribunal took up for consideration the appeal in respect of the Assessment Year 2008-09 and followed the same logic in para-19. 17. A careful look at the entire order of the Tribunal would sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooperative banks. There are different types of cooperative societies, many of whom may not be transacting any banking business. Let us take for instance an agricultural society. They may be indulging in the buying and selling of agricultural produce or seeds. In a way, the same could also be termed as a commercial or banking activity. But the same would not make such societies banks within the meaning of the Banking Regulations Act, 1949. 19. The place where the Tribunal went wrong was that without reference to a single transaction that the appellant had with any non-member, the Tribunal upheld the findings of the Assessing Officer merely on the basis of the name of the appellant and one of the objects clause in the Bye-laws of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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